Under the Affordable Care Act (ACA), employers are required to begin informational reporting to employees of amounts spent on certain health plan items. The IRS has provided guidance in the form of FAQs to assist employers in such reporting.

The Internal Revenue Service has
published a chart (reproduced below) that details the type of coverage taken into account for Box 12, Code DD reporting.

Payroll systems—whether handled internally or provided by third-party vendors—will need to capture data from the employer that has historically not been part of a payroll system. Employers therefore should familiarize themselves with the specifics of the new requirements. Please note that the items reported must include both employer and employee contribution amounts.

Form W-2 Reporting of Employer-Sponsored Health Coverage

Box 12, Code DD

Coverage Type

Report

Do Not Report

Optional

Major medical plan.

X

Dental or vision plan not integrated into another medical or health plan.

X

Dental or vision plan which gives the choice of declining or electing and paying an additional premium.